D. After the end of the reporting period, prior to authorising for issue the financial statements for year ended 2017 March 31, the following material information arose:

FPS is being sued by an employee who lost a limb in an accident at work on 2017 March 15. The company is contesting the claim as the employee did not follow safety procedures, as instructed. The financial statements include a note of a contingent liability of $500 000 for personal injury damages. In a recently decided case where a similar injury was sustained. a settlement of $750 000 was awarded by the court. Although this injury is similar, circumstances of the accident in the decided case are different.

ii. After year end, a substantial quantity of inventory was destroyed by fire The loss was not adequately covered by insurance and that is likely to threaten the ability of the business as a going concern.

Discuss the matters to be considered when making decisions under IAS 10. (4 Marks)